China Lawyer Blog

Dec19

Enforceability of non-compete under Chinese law

As in other countries, non-competition covenants in China are seen as a restraint on trade and are not favored by the courts, particularly if drafted by the employer and not negotiated between the parties. Enforcement of non-competition clauses results in a balancing of the employer’s legitimate protectable interest(s) against the hardship imposed upon the employee by the restriction upon the employee’s ability to work. As experienced China lawyer in the field of non-compete agreement, we share our insights below.

There are two situations where a company typically encounters a non-compete: (1) when it has a valuable employee, information or contacts it wants to keep within the organization; and (2) when a new potential hire arrives with a non-compete that may restrict his/her ability to work for the company. In either case it is important to understand the fundamentals of how to use a non- compete agreement and when to avoid a potential employee who has one.

Consideration for non-compete

One indispensable component of an enforceable non-competition clause is that there must be adequate consideration for the employee to enter into the agreement. For a new employee, that consideration can be the job itself. Pennsylvania courts have uniformly determined that adequate consideration exists for restrictive employment covenants that are part of the formation of the employment relationship.

Patent due diligence in technology company acquisition

A technology development and patent portfolio management strategy may include patent due diligence to evaluate the intellectual property of others to gain freedom to operate in a given technology field. Especially when you are cut a transaction in China, it's important to first look at the Target company's patent information. Our China Patent lawyer reminds you to do patent due diligence in merger and acquisition activities.

An important goal of the acquisition due diligence process is to assess the strategic value of the patent portfolio to the Target Company’s business, including the extent of the exclusivity in the marketplace that these assets provide. As experience China lawyer of patent law, we provide full patent law service to international clients.

Ideally the Target Company has already mapped its patent portfolio to its products and services, showing which parts of the patent portfolio protect what lines of business. Unfortunately many companies have not done this basic analysis and because it can be time consuming it might not be practical to do in the short calendar time in which acquisition due diligence takes place. In a future post we will examine various approaches to address this problem.

Acquired Patent Risk: Exposure to Acquired Patent Infringement Risk

Examining the strategic value of a patent portfolio provides insights into the potential “upside” that the portfolio may provide.

China Patent Protection

A patent is a monopoly right granted by a national or regional patent office to an inventor who has created something new under Chinese law, useful and non-obvious; e.g. an innovation in the pharmaceutical sector that results in a new headache pill or a new technology used in computer hardware. Obtaining a patent to cover an invention or new technology enables its creator to prevent others from using, selling, manufacturing or otherwise copying the innovation without permission for a limited period (generally 20 years, subject to the payment of maintenance fees). In return, the patent owner discloses details of the innovation behind the invention as part of the patent application, thereby ensuring that the technology enters into the public domain where it can be used freely once the patent expires.

This is a basic introduction to patents and the patenting process. For details on Our Firm’s specific patent services, including patent drafting, prior art searching, China and international filing strategies and litigation support, click our intellectual property services overview page. Contact one of our attorneys or to review their expertise in your sector.

By providing the patent owner with a legal means to prevent others from exploiting the protected invention, patents provide a crucial method for inventors to obtain a return on the investment in research and development that led to the creation of that new technology.

Legal comments on China Supreme court's ruling in favor of Michael Jordan on his name v. trademark case

Copyright is the exclusive legal right, given to an originator or an assignee to print, publish, perform, film, or record literary, artistic, or musical works, and to authorize others to do the same. A name is not a literary, artistic or musical work and therefore cannot be granted copyright protection.

A name can be trademarked, however. A trademark is a symbol, word, or words legally registered or established by use as representing a company or product. If the word or words comprising a name is used as a trademark for a company or product, you cannot use that name for a competing or related company or product in such a way that it would likely cause confusion for the typical customer.

For example, if someone uses the name “John Smith” as a trademark for suitcases, you would be committing trademark infringement if you were to sell your own brand of suitcases under the name “John Smith.” If someone has trademarked her name “Mary Jones” for her restaurant business, you would be committing trademark infringement if you opened up your own restaurant named “Mary Jones”. You could, however, open a car wash named “Mary Jones” if no one else had previously trademarked the name for that type of business.

How to draft a Software development agreement under Chinese law: a checklist

Our software attorneys are capable of developing and negotiating software development contracts that protect the interests of clients and software developers alike. These development contracts often contain terms outlining the intellectual property (IP) ownership for these respective parties. A software development agreement is an intelligent way to head off disputes that might arise down the road, and it can help businesses avoid unnecessary litigation.

Software Development Agreements checklist

This checklist is designed to help those new to software development agreements under Chinese law to ensure that they have considered the principal issues that a typical agreement should cover. It also provides a little guidance as to the different approaches to some of the issues one you do business in China.

I have categorised each issue under one of these headings:

the software design and development process

the software design and development process

developer and customer testing

developer and customer testing

intellectual property rights and licensing

software installation and integration

warranties and indemnities

support, maintenance and service levels

updates and upgrades

other ancillary services

source code escrow

contract variation and change control

termination and its consequences

dispute resolution

The software design and development process

Design and development processes vary considerably depending upon the size and experience of the development team, the nature and complexity of the software, the demands of the client, and the development methodologies employed.

Registering and Protecting Your Trademark in China: A Step-By-Step Guide

Before you enter into China market, it’s of great importance to firstly register your trademark in China. There are six distinct steps in obtaining, registering and protecting a trademark in China. Below we explain in details how to register and protect your trademark under Chinese law and trademark application practice.

First Step: Conducting a Trademark Clearance Search

Before applying for a trademark, you want to determine if your proposed name is already taken. This process is called a trademark clearance search. You can retain our China Trademark lawyer’s service to conduct a preliminary trademark clearance search at China trademark Office ("CTO") website.

However, in most instances, if you engage a capable China Trademark lawyer, the trademark attorney should conduct an extensive trademark search for you. This is because trademark attorneys are familiar with sophisticated search techniques on the CTO's website, which may uncover existing trademarks that are close to your proposed name.

In addition, an experienced attorney will be in the best position to interpret the search results obtained from the CTO website.

Second Step: Filing the Trademark Application

Filing a trademark application can be done by retain our China trademark lawyer and we shall prepare all the documents and filing for you. You do not have to be an attorney to complete a trademark application and as such you can DIY. Though it is quite complicated job and we highly recommend you retain our service to do it. This is because completing a trademark application is complicated and if you put incorrect information in your application, you will not obtain your trademark.

Tips of Drafting Purchase and Sales Contract Under Chinese Law

This China lawyer blog shares insights on legal contract writing matter. At this china law firm, we regularly update this blog and please come back if you are interested in our legal service or for your information.

The preparation of legal documents involves difficult or doubtful legal questions which, to safeguard the public, reasonably demands the application of a trained legal mind. Thus, acts and services which constitute the practice of law include drafting, and preparing legal instruments and documents, such as trust documents, real estate contracts, deeds, notes, mortgages, and releases, drafting, preparing, and causing a will to be executed, preparing, or advising in the preparation of, income tax papers and returns, and preparing and prosecuting patent applications.

Drafting Contracts is a textbook designed to teach students how to draft business contracts. It is intended for use in an upper-level drafting course, for which it would be the required text. In addition, many aspects of the textbook can be integrated into other courses—for example, a first-year contracts course, a mergers and acquisitions course, or a transactional clinic. In these courses, the book could be either a required main text, a supplemental text, or a recommended text. A lay person’s preparation of a corporate charter, bylaws, and related documents, which are important contractual documents and legal instruments, also constitutes unauthorized practice of law.

Chinese English Legal Translation Lawyer

Our China lawyer blog shares insights on legal translation matter. At this china law firm, we regularly update this blog and please come back if you are interested in our legal service or for your information.

LEGAL DOCUMENT TRANSLATION IS NOT A SIMPLE TASK

Be Sure to Select Your Translation Vendor Carefully!

When correct and accurate translation of legal documents has crucial implications, America’s top law firms and corporate legal representatives turn to the experts at Legal Translation Solutions.

Legal Translation Solutions provides high priority translation services for all legal aspects. Whether you need a translation for a critical business contract, complex litigation materials, evidence documents, a financial statement, deposition records, technical patent confirmation, application letter, birth certificate, or any other essential document, Legal Translation Solutions can complete the translation from and into any languages for you quickly and accurately.

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About author

Peter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.